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29/02

28 March 2002

ENTERPRISE NEIGHBOURHOODS - BOOSTING ENTERPRISE IN DISADVANTAGED COMMUNITIES

Chancellor Gordon Brown today took forward the Pre-Budget Report consultation on a series of measures to support small businesses in deprived areas and so create 2000 enterprise neighbourhoods in Britain.

The measures for consultation include:

  • A Community Investment Tax Credit (CITC), which will stimulate enterprise in disadvantaged communities through tax relief for investment in enterprises in disadvantaged areas. Draft legislation has been published today for consultation;
  • Improvements to the disadvantaged areas stamp duty relief, which will extend relief for commercial transactions to contracts incorporating 6 or more dwellings and commercial leases - this will encourage investment in residential property and support small businesses who are more likely to occupy leased premises;
  • Introduction of the VAT flat rate scheme to firms with a turnover of £100,000. 540,000 businesses will be eligible, significantly cutting compliance costs by up to £1000 a year.

Speaking at the TGWU "Manufacturing Matters" conference in Leeds, the Chancellor said:

?The small firms of today are the big firms of tomorrow. I want people in disadvantaged communities to see that the enterprise culture too often restricted to the elite is open to them - not least in high unemployment communities where employment for too long has passed by.

?The Government has a special responsibility to remove the barriers that hold small firms back and create a level playing field in which small firms have an equal opportunity to succeed and grow, so we are delivering a more favourable environment with special incentives, particularly in our high unemployment areas, to create 2000 enterprise neighbourhoods across Britain.

?Genuine equality of opportunity means that no matter your background or area, no matter your wealth, you should have the chance if you have the talent and initiative to turn your ideas into a successful business - making Britain a more dynamic, vibrant, job-creating, wealth-creating economy.?

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NOTES TO EDITORS

1. The Community Investment Tax Credit (CITC) was proposed by the Social Investment Taskforce in October 2000. Following consultation the Government announced in PBR 2001 that draft legislation would be published before Budget 2002, with legislation brought forward in Finance Bill 2002. The aim of the scheme is to stimulate enterprise in disadvantaged communities by providing a tax relief worth 25 per cent of investment, spread over 5 years, for investments made through qualifying intermediaries. The Treasury published draft legislation today for consultation. The Small Business Service are today publishing the accreditation rules on their website. Changes to the design of the scheme include:

  • the scheme will allow accredited intermediaries to channel funding to both social enterprises and for-profit small business;
  • rules for the structure of the loans qualifying for the credit, and for the use of funds by CDFIs will be more flexible;
  • the Government will increase the limit on the amount of funds that can be raised by wholesale intermediaries from £10m to £20m;
  • the Government proposes the scheme include a generous regime for property development for social enterprise.

2. The Government has been consulting on the definition of residential for the purposes of this stamp duty relief. As stated in the Pre-Budget Report, the intention is to raise the limit significantly or abolish stamp duty for all non-residential transfers in disadvantaged areas in due course.

3. The VAT flat rate scheme will significantly cut record-keeping and form-filling by businesses and thereby reduce compliance costs by up to £1000 per year. The scheme will allow businesses with a turnover of £100,000 from next month to simply calculate their net liability as a percentage of their total turnover, rather than keeping a record of the VAT charged to each individual purchase and sale and using the records to work out net liabilities. The scheme will be available to around 32,000 small manufacturers, 15,000 small agricultural firms, 11,000 small pubs and 22,000 transport companies. From next year, it is planned that the scheme will be extended to more small firms.

4. The full text of the Chancellor's speech to the TGWU is available on this website.

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Finance Bill 2002 Draft Clauses: Community Investment Tax Credit

Press Notice index 2002 January to June